Texas Wants Its Gold Back From The Federal Reserve

This is one of the most interesting stories I have read regarding the precious metals market in quite some time. It appears that Texas Rep. Giovanni Capriglione has a bill in play that would move the state’s gold from New York (where its under the “safekeeping” of the ultra shady Federal Reserve) to a depository within the state of Texas itself. The reason this would be such a big deal if it happens, is because a lot of the gold bought and sold globally is very likely not actually owned by those that “buy” it. From my perspective, pretty much the only countries that actually buy gold and bring it within their borders are China, Russia and Iran. Most other nations that claim they “bought” gold, most likely hold a certificate that states they have gold in London or New York. So in other words, they have no gold. It looks like Texas is wising up. From the Star-Telegram:

Freshman Rep. Giovanni Capriglione, R-Southlake, is carrying a bill that would establish the Texas Bullion Depository, a secure state-based bank to house $1 billion worth of gold bars owned by the University of Texas Investment Management Co., or UTIMCO, and stored by the Federal Reserve.

“If you think gold is a hedge, or a protection, you always want it as close to the individual and the entity as possible,” Paul told The Texas Tribune on Thursday.” Texas is better served if it knows exactly where the gold is rather than depending on the security of the Federal Reserve.”

You’ve gotta love Ron Paul. The guy is still raising hell even after he left Congress.

The highly political Governor also appears to be on board…

“If we own it,” Perry said, “I will suggest to you that that’s not someone else’s determination whether we can take possession of it back or not.”

“We don’t want just the certificates. We want our gold. And if you’re the state of Texas, you should be able to get your gold.”

Come on Rick, that sounds like terrorist talk.

The United States and many other countries stopped pegging their currencies to the gold standard decades ago. Capriglione said the bill is not about putting Texas on its own gold standard. Rather, a depository would give the state a reputation as being more financially secure in the event of a financial crisis.

Transporting gold from New York City or other banks to Texas would be impractical from a security and logistics standpoint, Capriglione said.

Ok, that’s just weird. Gold is shipped all over the world every single day. This isn’t even an international shipment. My guess is that the Fed has already made it clear they will not be sending any gold from Bernanke’s basement to Texas.

He believes that it makes more sense to sell the gold that Texas has elsewhere and repurchase it within state lines.

He said the measure wouldn’t pose a significant expense, because the gold bars could be safeguarded in a small area, no bigger than 20 square feet.

Again, if that’s all it is what’s so hard about shipping it?

Such a bill might not divide lawmakers strictly along party lines. Sen. Rodney Ellis, D-Houston, called it “an interesting concept” but said he wants to learn more about it and talk to “colleagues in the financial industry” before weighing in on its merits.

Great idea Rodney, because taking advice from Wall Street leads to such favorable outcomes.Full article here.